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The buyout industry’s cash pile continues to erode away as firms struggle to raise new funds and the pace of deals increases, according to quarterly figures from data provider Preqin.

Buyout firms’ committed but unspent capital dropped 4% in the first quarter of the year to $409bn and the figure has dropped further since – by this month it stood at $405.8bn. It is a drop of 18% from the peak of the market in December 2008, when buyout funds had $492.9bn at their disposal.

Over the same period, the private equity industry as a whole – including areas such as venture capital, mezzanine and real estate – has also seen a decline in unspent capital, which this month stands at $952.1bn. If the industry fails to see a rise in fundraising that outstrips their rate of investments this year it will mark the third successive year in which private equity’s spending power has been diminished.

However, venture capital funds have slightly more available to spend now ($161.5bn) than they did at the end of the year ($153.1bn).

The Preqin research attributed the decline to an active deal market – in which there were 623 buyouts worth a total value of $49.9bn in the first quarter – and a slow fundraising market, which dropped to its lowest level for nearly a decade with 96 funds raised worth a total value of $46.1bn.

Despite the difficulties, the report was optimistic the trend would eventually stop, citing positive early fundraising signs in the first quarter driven by high levels of investment exits and subsequent distributions to investors. Stories of fundraising success so far this year have included BC Partners, which held a first close on €4bn in March and Montagu Private Equity, which raised a final figure of €2.5bn this month.

The report said: “We do expect that total capital raised by the industry will start to pick up as we move through 2011, replenishing some of the asset class’s firepower which has started to drop in the past couple of years.”